ATTN BP Employees,

Updated interest rates that impact your BP Pension (BP RAP) have been released. For a clear understanding of these changing rates, please find attached our interest rate chart detailing the current interest rates influencing your BP RAP and our predictions for where they may head in the future.  The top row contains the current interest rates used to calculate your pension for the months listed.  The bottom row contains Capstone Wealth Advisors’ estimate of where we forecast rates going to for the various future dates listed.

What You Need to Know:

  1. Interest Rates used to calculate your BP RAP pension were closely in line with our forecasted estimates last month. This impacts BP Retirees selecting August 1st as your Benefit Commencement Date. For May, we anticipate rates will move slightly higher.

 

  1. What Does this Mean for You? With corporate segment interest rates continuing to remain at elevated levels (all above 5%), BP Employees looking to retire in 2024 will likely benefit by waiting to collect their pension until the second half of 2024 or later when interest rates are more likely to drop. It is important to note that waiting to file for your pension does not impact when you can retire from BP, you can file to collect your pension at any time post separation from BP. We strongly encourage you to speak with one of our experienced financial advisors to discuss the impact these rates could have on your BP RAP and your overall retirement goals. We can help you understand the best option for your long-term retirement planning needs.

 

  1. Why Are Rates Remaining So High? Interest rates remain elevated due to several factors such as persistently high levels of inflation, overall economic activity, and a lack of progress towards the Federal Reserve’s 2% inflation goal. The Fed is using high interest rates to slow down inflation and prevent the economy from overheating. Despite a series of rate hikes, the pace of inflation has now leveled off well above its target, indicating a lack of further progress towards its 2% goal. External factors, such as cost increases in sectors like home and auto insurance, also contribute to the persistence of inflation.  The Fed is expected to maintain these elevated rates until later in 2024, with the potential of rate reductions currently anticipated for the September of November meetings and then incrementally thereafter.

 

  1. What’s Next? The Fed has indicated that the sharp interest rate hikes of the past two years will likely take longer than previously expected to bring down inflation. This suggests that there may be few, if any, rate cuts this year. The Fed’s current stance is that higher rates may need to stay in place for longer than previously anticipated. Recently, Fed Chair Jerome Powell stated that the Fed needs more time to gain a “greater confidence” that inflation is actually trending down and returning to its 2% target.  Other members of the Federal Reserve have publicly suggested that it is unclear whether the Fed’s rate is high enough to quell inflation.

 

Need Some Guidance?

Don’t worry if this all feels confusing, we’re here to help! Our team of financial advisors is well-versed in all things related to BP retirement plans. Whether it is the BP RAP, ESP, SVP, RRSP, or any other BP-related plans, we have you covered.

Want to learn more? Simply email us at info@capstonewealthadvisors.com or give us a call at (877)739-6007.

Best wishes,

Capstone Wealth Advisors

Bellingham, WA

877-739-6007

Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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